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About this blog: I grew up in Los Angeles and moved to the area in 1963 when I started graduate school at Stanford. Nancy and I were married in 1977 and we lived for nearly 30 years in the Duveneck school area. Our children went to Paly. We moved ... (More)

About this blog: I grew up in Los Angeles and moved to the area in 1963 when I started graduate school at Stanford. Nancy and I were married in 1977 and we lived for nearly 30 years in the Duveneck school area. Our children went to Paly. We moved downtown in 2006 and enjoy being able to walk to activities. I do not drive and being downtown where I work and close to the CalTrain station and downtown amenities makes my life more independent. I have worked all my life as an economist focusing on the California economy. My work centers around two main activities. The first is helping regional planning agencies such as ABAG understand their long-term growth outlook. I do this for several regional planning agencies in northern, southern and central coast California. My other main activity is studying workforce trends and policy implications both as a professional and as a volunteer member of the NOVA (Silicon Valley) and state workforce boards. The title of the blog is Invest or Die and that is what I believe is the imperative for our local area, region, state and nation. That includes investing in people, in infrastructure and in making our communities great places to live and work. I served on the recent Palo Alto Infrastructure Commission. I also believe that our local and state economy benefits from being a welcoming community, which mostly we are a leader in, for people of all religions, sexual preferences and places of birth. (Hide)

Services, Dining and Shopping Downtown in Palo Alto

Uploaded: Jul 16, 2014

I see three principal sets of activities where workers, residents and visitors spend money1) eating and drinking, 2) personal services and 3) retail shopping. I see four principal groups of customers for these activities1) daytime workers, 2) downtown residents, 3) visitors (including residents who live elsewhere in Palo Alto) and 3) people studying or working at Stanford.

And I see several competitive challenges that shape what goes on downtown.

One is the Stanford Shopping Center. A second is the revitalized Town and Country Shopping Center. A third is that both of these centers have central management and onsite parking. A fourth is that rents downtown are expensive. A fifth is that much "shopping" is now done online. Last week one day there were 8 packages left at our 17 unit condo and everyday there is a stack ordered by residents. Stores that sell books, CDs and movies are dealing with customers who no longer get these products at stores.

Most of our purchases in the downtown area outside of dining and items that are easily available at Whole Foods, TJs, the farmers market, Walgreens and CVS, are for services. Downtown has places for phone and computer services, financial services, for repairs of all kinds (for us, it includes glasses, shoes, clothes, jewelry and more), haircuts, dry cleaning, the UPS store, dentists and medical care. Yes we can do a little traditional shopping downtown but the shopping centers have a broader array of items and it seems not in the cards that these are needed to be duplicated downtown.

Downtown works for us.

I also see a lot of empty retail sites. I have no quarrel with zoning for ground store retail BUT I do not think zoning can guarantee that there will be takers.

The retail environment for downtown is changing. The growth in daytime customers comes mainly from workers and visitors. Residents who do not live downtown have many other options.

We, like many residents, remember places we enjoyed years ago but change is everywhere in the retail world. And the competition for small retail (not service) businesses in a high rent, worker rich daytime environment is the reality in Palo Alto.

I have heard all the complaints but if readers have constructive ideas that do not involve insulting other people please send them in. The council and planning commission are interested in hearing what could be done better that is realistic for downtown Palo Alto.

Posted by Free Market,
a resident of Old Mountain View,
on Jul 16, 2014 at 9:57 pm

"I also see a lot of empty retail sites. I have no quarrel with zoning for ground store retail BUT I do not think zoning can guarantee that there will be takers. "

Actually, zoning CAN guarantee takers. If the city clearly communicates to property owners and developers that failure to rent the space is not a justification for a zoning variance, then the rents on those spaces will drop to a true fair market value and they will be filled. What we see in MV is that developers and commercial land owners will keep their property idle with the expectation that the City will eventually back down and allow massive variances.
Only recently has the community begun to push back--perhaps after observing the referendum situation in PA.

I think the above post is dead-on. The CC has to send a very strong message to the downtown PA (DTPA) building owners that there will be no variances to first floor retail zoning. Period.

Unless they get that message loud and clear, they are just going to hold out and wait for the city to blink. They can get retail in their first floor spaces...they just don't want to take a lower price (compared to office space pricing) to do so.

Posted by Huh?,
a resident of Downtown North,
on Jul 17, 2014 at 1:46 pm

Can anyone point out an example of the City "giving in" and granting a "Variance" for ground floor office where retail is required? I am not aware of any...addresses or business names please? There are some downtown locations that office is a permitted use on the ground floor.

Posted by Garrett,
a resident of another community,
on Jul 17, 2014 at 1:47 pm

Since the creation of the outlying shopping center, mall and then online retailers, Mom and Pop stores have taken a beating. Miles of free parking, the ease of one stop shopping and the wonderful world of many choices did wreck havoc on downtown merchants. 6 screen movie theaters or TV viewing habits were to blame for single screen theaters decline. In short things change, sometime trends are hot then cool back down again.

One day landlords will be wanting retailers to return. Sad thing is some just couldn't take the new rent/lease hikes.

Posted by pa resident,
a resident of Evergreen Park,
on Jul 17, 2014 at 2:21 pm

IMO Cal Ave offers a more limited, but very nice selection of restaurants and shops compared to University Ave with lots of parking in the lots on Cambridge and Park Ave. Do you think some PA residents are choosing to dine and shop on Cal Ave rather than University Ave?

Posted by stephen levy,
a resident of University South,
on Jul 17, 2014 at 5:52 pmstephen levy is a registered user.

I think the poster who asked for specifics has a good point for the posters throwing around accusations about variances.

I do think there is potential for more eating/dining and service sites in downtown but expect that can occur without new policies.

I am arguing that the potential for retail shopping outlets is constrained by several factors.

Today in paper in LA there was a story about online shopping increasing its share of retail by 50% in the next four years and major retailers opening warehouse/distribution centers in anticipation. I think there are solid reasons why places like Borders, Blockbusters and the Shell station went away. Retail preferences change and downtown IS next to two thriving shopping centers.

As to Cal Ave, I am no expert but expect it serves as a site for people who live and work nearby and to the south. We enjoy Cal Ave but still do our service and convenience shopping near where we live downtown.

It is one thing to allege without evidence that landlords will reduce rents and open their doors to retail clients downtown and quite another to point out why and which retailers (not restaurants and service places) might be interested in coming downtown and which of the important customers downtown are under served by something that realistically could go downtown and why the market is not working.

Just today we learned that Rangoon Ruby will open a second site downtown where a former restaurant moved out. Took no time at all while other restaurant sites remain vacant. Where is the market failure?

Finally, the people calling for more retail are often the folks who are calling for no more jobs and housing downtown.

Posted by Restaurants,
a resident of Old Mountain View,
on Jul 18, 2014 at 10:25 am

"Just today we learned that Rangoon Ruby will open a second site downtown where a former restaurant moved out. Took no time at all while other restaurant sites remain vacant. Where is the market failure?"

There is a vast army of restaurant entrepreneurs ready to open dining establishments if a reasonable rent can be negotiated. Unfortunately, the landlords are asking for too high a price for the economics to work out, so those units may remain empty. Talk to restaurant owners about lease costs and you may learn something about how the free market is working out ..

Posted by stephen levy,
a resident of University South,
on Jul 18, 2014 at 12:40 pmstephen levy is a registered user.

@curmudgeon

What I said related to the Shell station (see above) was

"I think there are solid reasons why places like Borders, Blockbusters and the Shell station went away. Retail preferences change and downtown IS next to two thriving shopping centers."

I don't think people buy gas online (where did you get that idea) but I do think overall gas consumption will decrease and downtown station locations will continue to close.

@ restaurants

There are lots of restaurants opening downtown. What is your evidence then that landlords are asking too much and why would they do that and leave space open for years such as the old Zucca site next to where Moniques was?

Posted by Garrett,
a resident of another community,
on Jul 18, 2014 at 4:43 pm

In the last 40 to 30 years the retail scene has changed, gas stations to hardware stores have disappeared, entire chains have been gobbled up or just went out of business. I don't think offices have anything to do with losing retail, more like high rents, changing shopping habits, healthy diets or in the case of gas stations costly upgrades.

More and more people have been shopping online, buying things right off the phone, I am one of them. Haven't purchased stock through a broker, shop at Costco, pay bills online, buy travel online, health, dental, medical, auto and home is dealt online. I do hit the stores for food and clothes but sometimes I buy online.

I am 50 years old, 30 years ago we were doing things differently that caused changes to people who were 50. People 20 year old today are doing things differently then I do, changing the way we do business, shopping habits, eating habits, travel habits.

@Garrett - While I totally agree that our buying habits have affected local retail, offices affect retail space because landlords can chafe more rent for an office space than a retail or service business. You can't blame the landlord for wanting to make more money if the City has allowed spaces previously zoned as retail to be used as office.

Posted by George2,
a resident of Embarcadero Oaks/Leland,
on Jul 18, 2014 at 10:12 pm

In my opinion, Market forces will always lead to new evolution in communities...the key is BALANCE. The CC is in place to manage a direction conducive to the entire community and it's steady growth for the pleasure of it's residence. It is key to value the needs of the tax paying residences, unless the commercial owners wish to take on a greater impact. Univ Ave often feels like it belong to those outside PA, that is not what a community should feel like. Managed growth is possible if balanced for all citizens and not just the profits of blding owners.

While Univ Ave can be a thriving place beyond work and food. Where there are people there are opportunities and money to support it. The CC needs to think creatively and help property owners to see the benefits long term of being a owner in part of something bigger and better than just the next start-up rental. More satisfied people ultimately along the area to continue to thrive.

Yes, I agree the CC needs to demonstrate leadership with a collective vision...possible ask the residents, workers and students what are the top five categories of retail, etc you want to see in downtown. Give the blding owners a choice to cover one category in addition to business space. Set time limits on vacant properties and assess additional taxes on the empty space based on an average retail occupant. Yes, downtown needs more retail, small boutiques, a hip bookstore (Yes!), art galleries, spaces for humans to explore and socialize beyond work and food.

Get serious about the car/parking situation...take habit changing action. Create something fun and unique for Palo Alto. What about a open air electric trolley. Fresh Air Sundays...close off University Ave to cars every Sunday during the summer months...people can still park on the side streets.
Get the community and businesses involved (pilot it the first Sunday of the month/ or during a month this fall in preparation for the next summer).

We should not stop progress, but we should manage it for the pleasure and benefit of the community.

Posted by Garrett,
a resident of another community,
on Jul 19, 2014 at 6:15 am

Right now office space is hot, so hot it is eating into retail space. I know one day the office market will cool, businesses will be looking to lower cost by reducing space they lease. Landlords might get back their retail spaces again and will have to adjust their rents. Right all these young workers fresh out of college with student debt that when fully paid off will have money to support a strong retail market.

The phenomena of rent spiking in Peninsula restaurant spaces has occupied various articles in the last two years, including comments from Asian Box chain owner Frank Klein on its implications for restaurant economics. SFgate (the online SF Chronicle) and the Daily Post have carried trenchant articles. In our MV downtown restaurant cluster on Castro Street, one popular restaurant's lease came up for renewal last year and the asking rent tripled from 5k to 15k monthly. A restaurant of its size would need to raise pricing by around $4-6 per _cover_ (not just per check) to handle the added overhead, which meant that the inexpensive family-run restaurant there was forced to close. Rent has been the talk of the peninsula restaurant trade in recent years -- you can certainly find the journalistic reports I mentioned, if you research.

Another downtown-MV restuarant space worth probably 10k-plus monthly has stood empty for four years. I'm told the building owner (portion deleted) is wealthy enough to be unconcerned. That is one reason spaces stay idle. Variations on these examples abound.

Posted by We can do better,
a resident of Old Palo Alto,
on Jul 20, 2014 at 5:42 am

Regarding dining and shopping in Downtown Palo Alto----seems to me that Los Altos with their upgrades and mix of dining, personal services and unique stores is doing something that we could learn a lot from. Safeway and Whole Foods are bringing in shoppers, a good mix of retail and personal services and not a lot of Big Box Chain Stores. When I have to buy something there (Linden Tree Bookstore), I find myself walking the beautiful tree-lined streets, pick up a bite to eat and often spend money in other stores on the street. On University, the sidewalks are caked with black grime, lots of homeless, too many Big Box Stores, large trucks spewing out exhaust, noisy too, and the benches to sit on are taken up by a lot of homeless. My children are scared by what they see downtown.......it really needs a major overhaul, starting with deep cleaning the sidewalks!

Posted by stephen levy,
a resident of University South,
on Jul 20, 2014 at 1:22 pmstephen levy is a registered user.

@George2

Thanks for your comment. I agree that we need attention to the parking situation downtown, am glad the city is working on that and hope they find solutions that address residents, workers and visitors.

I am all for asking users what they want but suspect the market is doing a good job since places are crowded. The tenants have to go with the majority preferences which won't suit everyone but I know what it is to not in the favored demographic as my favorite TV shows are often cancelled.

@ we can do better--see my comment above about not being in the dominant market segment. My experience of downtown is different from yours as I see crowds in most places and lots of children. There are nine children in our building many of whom arrived recently and I see all of them out walking or biking with their parents around downtown. I see families with children everywhere at dinner time downtown and crowds standing waiting for tables on the streets you say are stained and unsafe. I am glad you live close to T&C which sounds more to your taste.

I am mystified about your comment that are "too many Big Box Stores" downtown. If you are talking about Walgreens and CVS, they are first of all they are not like Costco or Walmart which is what I think of as big box and second these stores are among the most treasured by downtown residents and workers for their convenience.

As to the streets I find them safe during normal hours and am pleased that we have the Downtown Streets Team out and cleaning regularly.

If the area were really as terrible as you are describing there would not be crowds and waiting lines and would certainly not be high and rising home prices and rents being bid up by people desiring to live downtown.

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